Anti price “gouging” laws provide a disincentive for people to sell their goods in a disaster area. The reason things get expensive is because it’s more expensive to access disaster areas and tougher to get resupplied. Goods become more valuable and thus used more efficiently. If you have to pay 8 dollars for a bottle of water, you’re going to use it well. If you pay 2 dollars, chances are you won’t have water when you really need it.
Good water example in your post. Coincidentally, I sent the following to a friend earlier that was very happy that the greedy oil companies were being addressed with anti-price gouging laws.
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My favorite case of the effects of price gouging prosecution was a case in FL concerning water. When one of the hurricanes hit, there was some enterprising folks that loaded up cases upon cases upon cases of water bottles and drove down to FL. They opened up their trucks and were selling them for some “ungodly” prices, something like $50-75 a case or $4-5 a bottle. The result was that many of them were prosecuted under the price gouging statutes. Yes, they profited greatly. Yes, they seized upon an unfortunate disaster to make a lot of money. So, yes they were prosecuted.
The next hurricane hit, and guess what, no one showed up with water and there was a water shortage. I bet some of those folks wish there was a case of water available for $100, but the prosecution actually drove the greedy profiteers away and now no one has water available. The same thing is happening at this very moment in TX, there is a major fresh water shortage, however, I don’t know if they have similar price gouging laws as FL so I am hesitent to blame the government for the current shortage.